Sure, and poverty in China is defined by the World Bank as living on less $1.25 per day. So comparing this to poverty in the US is not viable.

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It is nearly meaningless to set any universal fixed "poverty threshold" in dollar terms. You can make absolute definitions by comparison to some other absolutes, like how many times will your income provide the food calories you need to live, etc. Normally poverty is defined WITHIN YOUR SOCIETY as some less than unity fraction of the average income, as I explain a few post back to Jeff:

... You will note that I said "poverty" by their national standards." "Poverty" is always a relative concept and for good reason - If you only have ~15% of the average income, your feel poor. If it were an absolute standard at the current level most of the US was in poverty circa 1900. About two decades ago, the US poverty level was an income higher than the average in Canada.

The Chinese government found out what 'the people' want in Tiananmen Square, and it terrifies them. They realize the importance of keeping the masses at the margins of existence, politically powerless, but nevertheless a powerhouse of production for the government's military ambitions.

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I agree they are very afraid of Tiananmen Square events or the recent Nobel peace prise. They have a very long way to go when it comes to free political speech (or even a reasonably sensored internet.)

The vast majority of the Chinese people are very happy with the CCP rule as it has delivered them from periodic hunger to buyers of cell phones, etc. - there are far more internet users in China than there are Americans! As I said in prior post most (>90%) of Chinese are more concerned with a full belly that complete freedom government policy as they remember well when they had neither.

Quite the contrary to your suggestion that the CCP is "keeping the masses at the margins of existence," the CCP understands that they are in danger of losing power if the average Chinese does not find his material living standards rapidly advancing. In fact that it is, is the only reason the Chinese people willing accept the suppression of their liberates.

That fear of the CCP that they will have revolution if they do not rapidly improve the living standards of the average Chinese (read that as in the interior) is why most of their stimulus (larger compared to their GDP than the US's stimulus) is directed towards building 100 new cities in the interior, rapid expansion of the railroads in the interior, new hospitals and clinics in the interior, etc. I.e. good paying (by Chinese standards) jobs are being created in the interior and this has essentially stopped the migration (about 1 million /per month only two years ago) to work in the coastal city factories. That is why those factories now have sever labor shortage and are increasing REAL purchasing power wages between 20 and 30% per year.

SUMMARY:Material living standards are very rapidly improving in both the coastal cities and for first time ever, in the interior. Not because the CCP is greatly concerned for the people, but because they are concerned they may lose their grip on power if even just US style stagnation comes to China. The Chinese people now expect their government to give them a much, much better life than their parents had.

Recent surveys show that the youth of American do not expect to live as well as their parents did and they are correct. -They won't as they inherit a huge government debt.($44,025.51 each today and rapidly growing)

Perhaps the US could subcontract to Chile the job of running the US government - They do complex jobs very well, including govern without deep debt and growing GDP.

Foreman Luis Urzua emerged from the San Jose copper mine at 8:55 p.m. New York time yesterday, the last member of the group hoisted to the surface in a four-meter long capsule. Rescuers hugged each other and sang the national anthem as the miners’ relatives and friends sprayed champagne and confetti.

“You’re not the same after this and neither are we,” President Sebastian Pinera told Urzua in televised remarks. “We will never forget this.”

The following is a point I have been making for some years because
China is no longer a cheap labor source. Thus it imports a huge fraction of what it then builds into its exports, so simple considerations of China's export in dollars gives a very, very, miss leading understanding of the importance of China's exports in it GDP compared to its rapidly growing domestic market part of its GDP.

"{conventional} measure indicates that {China's} export growth has accounted, on average, for almost 40% of the total growth in real GDP since 1990--rising to almost 60% since 2000. Yet these numbers, portraying a dominant and growing role of exports, are at odds with the fact that China was one of the few countries that escaped the great 2008-'09 global downturn without a major economic slowdown--suggesting that internal growth played an important role.

That's one reason other economists have used a very different measure: growth in net exports (total exports minus total imports) as a share of GDP growth. By that metric, exports contributed only between 10% and 20% of China's annual 10% GDP growth in recent years...."

Billy T comments:Again, as I have posted for years, the day is soon coming when China will not need US & EU buying its factory's production.* (The factories will still produce but market to the Asian suppliers of the components China imports (and Africa as promised under long term trade deals already signed). - I.e. There will be an Asian balance of trade with China (and S. Korea) making the higher value items and marketing to countries, like Vietnam, Indonesia, Iran, etc. which produce the lower value added items / components / oil & gas China is importing.

*Then China will not finance the US's debt, but tell the US to go to Hell so the dollar will collapses (if it has not already) and the cost to China of the raw materials (oil, grains, minerals, etc.) it must import will be much lower with US & EU in deep depression.

"... the 400-500 km/h high-speed railway technology is in its final phase of development and the 380-km/h trains are already coming off production lines, He added.

As of September, China had put into service 7,055 kilometers of high-speed railway tracks - the longest in the world - and that is expected to reach hit 13,000 kilometers by 2012. "We aim to lead the world in high-speed railway construction," said He.

In September, the China-made CRH380A train hit a speed of 416.6 kilometers per hour on a test run to set a new world train speed record. ..."

Unlike the US, China has infrastructure plans extending up to 50 years into the future. (Ten consecutive "5 year plans") and is already negotiating with 17 other nations to complete an amazing rail system. Specifically, China has already agreed to finance a rail link into Myanmar in exchange for the rights to that country’s lithium reserves. Russia and China have announced plans to build a new trans-Siberian link. Iran, Pakistan, and India are each negotiating with China to build domestic rail lines that would link into the overall transcontinental system. …” {shown below}

“…China would spend its own money building the rail links in exchange for resources it currently lacks. According to Wang Mengshu, a consultant working on the project, “We would actually prefer the other countries to pay in natural resources* rather than make their own capital investment.” {China wants to spend dollars from its reserves for real assets, and this is just another way.}

{post 205}... The US is expanding or building 11 bases in Columbia, supposedly to help suppress Columbian drug production*; however, some are very near the Brazilian border and will have fighter bombers based on them than can attack most of Brazil, even without any aerial re-fuelling. ... Thus, Brazil has become concerned about the US’s intentions and currently lacks the capacity to intercept these supersonic fighter bombers, should they invade Brazil. ...{read post 205 to understand why this attack by US is a real fear}

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The new president of Columbia is not a puppet of the USA. He has re-established trade relations with Hugo Chavez, and cancelled the agreement that allowed the US to expand and build new fighter bomber bases in Columbia.

Now the US has two popular elected governments it wants to destabilize and no nearby base to operate from. Perhaps that is why the US backed (the only nation in the hemisphere to do so) the military coup in Honduras that over threw the popular elected government?

"... crude oil is actually more affordable today for your average Chinese consumer than it was five years ago. Consider that in 2005 the average Chinese urban consumer had a monthly disposable income of roughly USD321. With oil trading at an average price of about $61 in 2005, disposable income priced in barrels of oil worked out to about 63.1 barrels of oil per person per annum.

Thanks to a steady rise in disposable income and the rising value of the renminbi to the US dollar, average annual Chinese disposable income works out to USD7,872 per year as of the third quarter of 2010. Assuming oil prices of $85 a barrel, Chinese disposable income works out to nearly 93 barrels of oil per person per year. In other words, your average Chinese consumer can afford more oil despite higher prices.

In contrast, at more than $36,600 per annum, your average US consumer has a much higher disposable income in absolute terms. But if we price that income in terms of barrels of oil, it’s actually shrunk somewhat over the past half decade. That’s because US disposable income hasn’t increased as quickly as crude oil prices. ..."

From: The Energy Letter <postoffice@kci-com.com> PS: China is selling more cars now than the US is and India will be too in a few years, IMHO, but they will need less fuel per mile driven. With value of dollar dropping and demand increasing I think price of gasoline with double by end of 2012.

Billy T comment:
Not only can Chinese buy more oil and US less, but China is locking up suplies in long term, paid up front, contracts, such as the one signed with Brazil's PetroBras a few years ago. China gave 10billion dollars to PetroBras in a "barter loan."

"Barter loan" is new terminology I just created*, but China invented, or at least is the first to widely use it. In the Brazil/China case, the 10 billion dollars lent up front is to be repaid by PetroBras sending 200,000 barrels PER DAY of crude to China for 20 Years. Many of China's 20 to 30 year contracts for oil and other natural resources call for specified tons or barrels to be shipped to China at a steady rate over the contract period. Others, require China to help develop the infrastructures of the exporting country as the materials are shipped to China. For examples: build roads, communication networks, ports, hospitals, schools, water and sewer systems, etc. More than half of all the flood control / power dams now being build in all the world are being built in Africa by China in exchange for raw materials, like copper, uranium, and other ores.

The US can not compete with China as has no long term plans and rarely looks beyond the next election. Burma, (Mimar) has many resources, including lithium, which China needs for Li-ion batteries. China has just signed contracts to build railroads there which connect into China. China always turns a "blind eye" toward the abuses of power inside another country and protects cruel rulers if they have what China wants. Even India is doing the same as Burma supplies natural gas to India. The mass murdering government of Sudan buys China's political support mainly with oil, but Chinese geologists are very active there now. China pays "hard ball" for future resources while the US sleeps.

"... the 21-member Asia-Pacific Economic Cooperation forum unanimously pledged to avoid raising more trade barriers and to roll back those they may have erected in the midst of crisis.
"We reaffirm our unwavering commitment to achieving free and open trade and investment in the region," the leaders said in a declaration released after their two-day summit ended Sunday. "We must take steps to build a foundation for stronger, more sustainable and more balanced growth in the future."
The show of unity contrasted with the discord over currencies seen days before at a Group of 20 summit held in South Korea. ..."

Billy T comment:
Not only is China rapidly increasing the buying power of its population, especially the urbanites with REAL salaries increasing in purchasing power about 20% per year, so as to provide an internal market to replace the declining buying power of the debt burdened US and EU; But China is also working hard to increase it trade with other Asian nations. China is no longer a low labor cost market compared to most other Asian nations (Japan excluded). Thus, much of what China is now exporting as high value added items, has a lot of parts imported from low labor cost Asian countries in these high value exports. With the money they earn by selling components to China, they in turn are buying products from China. China's intra-Asian trade is soaring!

Interestingly it is not only components that China is importing from Vietnam, but also women. The British Medical Journal study made last year, shows that there is a 32 million shortage of "reproductive age" women in China. He Yafu, Chinese demographic expert states that only 100 females are available for every 120 males even today. (Abortion of female fetus being the main cause but female infanticide is not rare in rural China. - Girl babies "accidentally" fall into the wells etc. as their murder is illegal.*)

China even has a serious "wet back" problem as the river between Vietnam and China (called the Beilu) is small, like the Rio Grand. That is how jobless Vietnam men slip into China where there is a shortage of workers. The women are more legally imported - You can buy a beautiful Vietnamese bride for less than $50 and select her from photographs here:WWW.cqxghj.com/productlist.asp When at home page click on third item of left column to see their photos. Home is the first item of that list. At that site, currently there are 120 pages with 12 photos per page for you to select from! (1,440 women in their "product list" . Website could show more but they seem to have storage space limits.) If Google translate is not working, the Chinese symbols at bottom of page 1 translate as: Page 1 / Total 10 page | Total 120 | First | Previous | Next | Last | - I.e. to advance one page at a time, click on next to last symbol. I was going to order lady number # 28 on page 3 but my wife said; NO WAY!" :bawl:
When married to Chinese man, she can legally enter China.*

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* I think this importation of brides is legal as China has a serious problem in rural areas with raiders that come into villages and steal several of the better looking women. - This is a very lucrative occupation as they are sold to rich men elsewhere.

"... Brazil's gross domestic product is likely to grow by 7% to 8% in 2010. That's enough to make Ben Bernanke groan with envy. But that's nothing compared with the pop that companies are getting from the 32 million people—in a population of 190 million—who have joined the middle class in Brazil since 2003.* Last year, Brazilians bought 4.5 million cars, twice as many as in 2003. The number of credit cards issued to Brazilians is up 438% in the last ten years. Brazilians took 56 million airplane flights in 2009; in 2003, the figure was 33 million. ..."

Billy T comment:
Note one of the companies I told you to buy several years ago, Sao Paulo’s water company, is up about 10 fold in dollars (partly because dollar is down) and it still pays about 6% dividends, regular as clock work.

* Mainly do the "bolsa familia" program, which is disscused in several earlier posts in this thread. (It give modest cash payments to poor, mainly rural, families that keep their kids in school till age 18 and get them required free vaccinations. Normally these kids went to work along side their fathers in the fields at about age 10, when they could barely read.) Bolas Familia, pays for itself immediately when the multiplier effect of all this new buying on business taxes paid. (The rural poor prior to B.F. live outside the cash economy, except for selling a few eggs or some pork to pay their electic bill.) That is nothing compared to the long term benefits as these kids leave the farm and take tax paying jobs in the city. Brazil has everything it needs, except well educated, skilled work force. Many of larger factories run training schools to meet their needs.

"... Commercial Aircraft Corp. of China announced its first 100 orders for the 166-seat C919 plane at the show as China strives to challenge Boeing Co. and Airbus SAS in the $70 billion-a-year global aircraft market. The nation is also developing high-speed trains, supercomputers and mobile-phone systems to create better-paying jobs and reduce its reliance on imports. “The airplane is a big deal,” Mark Howes, Asia-Pacific president for Honeywell International Inc., a parts supplier for the C919, ..."

Billy T comment; I am not sure but think the engines are not Chinese made, but imported. China does make the smaller jet engines for its fighters, so it is only a question of time before the C919 is fully a Chinese made plane and probably globally certified.

Petrobras has promised to deliver 200,000 boe per day to China for 20 years to repay 10 billion of development funds China supplied a few years ago.China is locking up oil, coal and other minerals in many long term contracts while deep in debt US sleeps.

Here are newer finds, in more shallow water. A few are in production and all are above the thick salt layer:

China has already passed the US in energy consumption as is not as efficient. Is world leader in car sales, and soon in various forms of alternate energy production and is far ahead in high speed rail.

"... China's environmental protection spending is expected to top 3 trillion yuan ($450 billion) during the 12th Five-Year Plan ... Wu said China's environmental protection market will become one of the biggest in the world with an annual growth rate of 15 percent to 20 percent. ...

The plan covers three industries – energy saving, environmental protection and resource recycling, ... the development of energy-saving and environmental-protection equipment is a top priority in the next five years.

The central government has allocated 210 billion yuan, as part of its 4 trillion yuan economic stimulus plan, to energy-saving, emission reduction, recycling and ecologically sound construction projects, ... Companies in energy-saving or environmental protection industries are enjoying preferential policies according to the current tax regulations and policy makers are considering further cutting their income taxes by 50 percent, the report said.

Billy T comment: Many other Chinese programs can be considered "green" also. Everything from high-rise apartments in the cities (vs US style "suburban sprawl") to replacing plane flights with high speed trains. Closing about 5000 small coal mines and rapid expansion of nuclear and hydro power are important green measures too.

China is rapidly growing its internal market and increasing trade with other Asian nations because it understands that its trade with US and EU will collapse soon. Due to: (1) US & EU buying being mainly based on borrowed money, not the competitive production of goods and services. They are cheaper from others now. AND (2) fact that China's exports are becoming or are no longer competitive with other Asian suppliers, except in high value added items, which they do not yet produce.

“… China, once an abundant provider of low-cost workers, is heading for the so-called Lewis turning point*, when surplus labor evaporates, pushing up wages, consumption and inflation, said Huang Yiping, former chief Asia economist at Citigroup Inc. … As growth soaks up cheap labor and wages rise, China is losing the competitive advantages it had previously, said Robert L. Tignor, a professor of modern and contemporary history at Princeton University. …Countries with lower wage costs such as India and Vietnam stand to benefit in attracting manufacturing. Minimum wages in Shanghai are $141 a month, compared with $77 in Mumbai and $74 in Hanoi, according to Morgan Stanley

A construction boom fueled by 4 trillion yuan ($586 billion) of stimulus and record bank lending has boosted job opportunities in western and central China. {BT notes: High speed rail is big part of that} … “Workers don’t want to leave their children and wives” now that more jobs are available near home.{For example} Chongqing, 1,492 miles up the Yangtze river from Shangha, had its economy expand 14.9 percent last year. - “Chongqing workers used to go to the east coast to work .... Now their home is a booming city, and lots of companies have moved there. Why do people there need to leave?” {said} Ningbo Ocean Textiles’s Wang.

Hon Hai’s Foxconn Technology unit said it will raise salaries at Shenzhen factories to 2,000 yuan a month in October from 900 yuan in May {BT notes: That is a 220% salary increase with annual inflation of about 10%! Foxconn has also moved two factories to the interior.}… Honda, based in Tokyo, raised pay by 24 percent at a parts- making factory in Foshan, Guangdong province, last month. {That is more typical of coastal cities salary increases. – Foxconn had a lot of bad PR with suicides at its huge city-like plants, so had to be the salary leader.} …”

"... According to Michael Kruse, consultant on nuclear systems for Arthur D. Little, the Chinese are ready to spend $511 billion* to build up to 245 reactors. ...

The global nuclear industry is willing to take big risks to get a piece of China’s nuclear budget. The danger is that in landing those fat contracts -- and sharing technology with Chinese partners -- the industry will help build a formidable rival.

Even though they lack the most advanced technology, the Chinese are rapidly becoming self-sufficient in reactor design and construction, according to the World Nuclear Association. ..."

* Billy T comment: Half a trillion dollars taken from China's reserves should be the biggest single step in China's program of spending US's paper for real physical assets (mainly paid-up-front, long-term delivery contracts for energy, food stocks / large farms & raw materials) to get into position where it can dump dollars without too much pain. - Exactly what I predicted China would do years ago!

This makes the 10 billion dollars given to PetroBras about two years ago look like a book keeping error but will give China 200,000 Barrels of oil per day for 20 years. There are many other such long term, up-front-paid delivery contracts already signed.
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7Dec10 by edit: "Money is not an issue, which is different from the rest of the world. The Chinese have the capacity to deliver and they are deadly serious about achieving it," Steve Kidd, director of strategy and research at the London-based World Nuclear Association (WNA), told Bloomberg News. ..."

“… There has been conscious decision made by the Chinese leadership to strengthen trade ties with its Asian neighbors at the expense of the West. China ends up running trade deficits* with many Asian neighbors (like South Korea), but surpluses with many Western countries. … China, not the U.S., is now South Korea's biggest trading partner. The latest available data from the CIA World Factbook show that Korea consistently runs a trade surplus with China. Korea's main export partners are: China 21.5%, U.S. 10.9%, Japan 6.6%, Hong Kong 4.6%. While Korea's main import partners are: China 17.7%, Japan 14%, U.S. 8.9%, Saudi Arabia 7.8%, UAE 4.4%, Australia 4.1%. …”

*Billy T thinks this is the natural lag effect. I.e. Because of its rapidly rising labor costs, China is buying increasingly more from lower labor cost Asian countries every month, often paying with Yuan, but on average it take at least a half a year for those Yuan to return to China as payments for purchases of higher value added Chinese products (often containing some lower value added components China imported in this rapidly increasing intra-Asian trade.).

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"... China has so far signed eight {Asian} FTAs {Free Trade Agreements}and is in discussions on five more, according to the Ministry of Commerce. ... The financial crisis has made us aware of the huge risks if we continuously bet on the US and the EU to spur exports. So, a regional FTA that could help boost the foreign trade and investment of the three nations, {China, Japan & S. Korea} and reduce reliance on Western markets, is a way out," Yi said.

As chill economic winds buffet the US and Europe, Chinese exporters have {also} fallen victim to protectionism. In the past two years, the US launched an unprecedented number of investigations into Chinese exports, and during the past 10 months cases the EU has initiated against China were worth more than five times those in the whole of 2009, according to the Ministry of Commerce.

The research center's Zhang said the FTA, if implemented, will have a "far-reaching" impact on the global economy...."

SUMMARY: As Billy T has long stated, China will mainly trade with other Asian nations and its suppliers of energy, food stocks, & raw materials. The trade with US & EU will be relatively unimportant. When China has spent down it dollars in reserves (see big step in post 334.) the day will come when it is to China's economic advantage to destroy the dollar by dumping those dollars still in reserves. That will send US & EU into deep, long-lasting, depression and greatly reduce their competition with China for global resources. I.e. China takes a one-time loss on the remaining dollars still held in their reserves, and saves on import costs for decades. Delays "peak oil" cost effects, etc.

"... China's newest fast train set a world record during a trial run as it hit 486.1 km/h on the Beijing-Shanghai line. The new record replaced one of 416.6 km/h set almost three months earlier, also in China, on the high-speed line between Shanghai and Hangzhou. ..."

Amazing!You would think after all this Bullet Train business is finished China would rest and be content with the greatest Train network in the World.However such is not the case,right now China is working on the next generation of fast trains that will result in(To begin with) 635mph Maglev Tube Transport.While Maglev is not new and several Countries have some type of Maglev technology much work is needed done to bring Maglev to it's real potential.

"China’s locomotive jewel is the Maglev in Shanghai. A train that floats on magnets and can reach a cruising speed of around 500Km/h pretty darn fast in our standards, but obviously not fast enough. Jiaotong University current have a prototype Maglev that can hit 600 Km/h and are planning a smaller Express’ version which will hit the dizzying speed of 1000 Km/h!! Twice that of current Maglevs in China or Japan! The people behind these super fast trains decided the only way to make them go any faster was to reduce friction, but as they already float on magnets there was little they could do to drop it further unless of course they put the whole train and its rails in a tube and created a vacuum……. So that’s what their doing! And is penned in for testing within the next 2-3 years! In tomorrows world it will be routine to travel 1000's of mph with ETT technology.(Evacuated Tube Transport)

Bolivia's new socialist constitution mandated an end to the private concession system
in the mining, telecommunications, electrical power,
forestry and utilities sectors -- which have been largely nationalized under
President Evo Morales. The change took effect on Monday. Vice President
Alvaro Garcia said miners have "nothing to worry about. Nothing will be
prohibited. We are simply complying with the constitution and paving the way
for new contracts ... all the rights (of investors) will be maintained."

Billy T comment:This surely covers the new Lithium projects, discussed in post 335, as well. The "new contracts" probably are for fixed time period, not "concession" of the minerals, etc. but I am just guessing.

Brazil has somewhat similar laws. If gold is found under your farm, you do not own it. The state owns all minerals etc. and grants concessions for extraction. Recently Brazil's government sold to PetroBras some still below the salt layer off-shore oil for ~$8 per barrel. The independent evaluations had said ~$5 would be the correct price, but this happened just before the elections. The Lula's workers party, which controlled both the government and PetroBras, is still partly of the view that private industry should not make money from Brazil's resources - the state should develop them for the benefit of ALL Brazilians, but understands that long held POV resulted in no net incomes and little production. However, "giving away" oil at `$5/ barrel would not have looked good to that party's supporters. As a result of this political price, the shares of PetroBras declined significantly. The new president (takes office in January 2011) was strongly backed Lula. (Only reason she won. - Lula left office with more than 85% approval rating.) She is an unknown concern to many as she has a history typical of her party. Lula broke with it in policy, except for greatly adding to the number of government employees.* I.e. Lula supported private development of Brazil.

*Effectively increasing the votes for his party at tax-payer's expense. (~5% of Brazil's workforce "works" for the government!) Newspaper found that some don't even know where their office is!

Billy T comment: Just more data (like building a high speed rail network larger than rest of the world's total) showing China is determined to economically develop the interior - switch to a domestic rather than export lead economy. There are three times more consumers in the interior than ALL Americans and they are growing richer and better served. Soon China will not be able to supply their demands* and make exports to the US - that is their plan as China does not want more US paper as payment for exports.**

China wants, and is rapidly getting, an growing trade with other Asian, African and S. American nations with payment for the exported Chinese goods, mainly in long term delivery of energy, raw materials, and food stocks. Or in the case of low cost of production Asian countries like Vietnam, the immediate import of labor intensive goods, especially components China will build into its higher value added products.

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* China's struggle with inflation (~5% now, and rising***) is just beginning as demand already exceeds supply and will for more than a decade. China had to raise bank reserve requirement TWICE in November 2010 and impose some price controls, especially on foods and is also releasing food items from government's emergency storage.

** This will have great adverse impact on the US as China will no longer be financing much of the US debt.

*** Rising inflation, driven by shortage of goods, is much more likely to cause an appreciation in the Yuan than anything the US Congress may do as a stronger Yuan will let China import more to increase the supply of goods for its people to buy. (More shirts and women**** from Vietnam, more cars from S.Korea, etc.)